All Posts Tagged With: "profits"
Porter: CSR Is Dead End
In an interview on HBR.org, management expert, author, and Harvard professor Michael Porter said that CSR (corporate social responsibility) is a dead end. “For folks in the CSR world,” he added, “the real impact isn’t on charitable giving but mobilizing the business itself.” (video and article available here)
Porter and partner Mark Kramer argue for a principle they label “shared value, which involves creating economic value in a way that also creates value for society by addressing its needs and challenges. Businesses must reconnect company success with social progress.” As they see it, “shared value is not social responsibility, philanthropy, or even sustainability, but a new way to achieve economic success.”
It’s not exactly a catchy name, nor is it a new concept, but if Porter and Kramer can get more companies to focus on the needs and challenges of society—rather than creating a demand for something we don’t really need—they will help CSR move to the next phase.
I would call that next phase corporate social profitability (CSP), since both companies and society benefit.
If you want to know what CSP looks like, consider the case of Dannon yogurt in Bangladesh, which I wrote about here. Danone teamed up with Grameen Bank to develop…
24Mar2011 | Steve George | 0 comments | ContinuedPaying Disengaged Employees
The Workforce Focus category in the Baldrige Criteria is organized into two Items, the first of which explores how you engage your workforce to achieve organizational and personal success. I’ve written before about the Bottom-Line Value of Employee Engagement, which Gallup states can be as much as a 70% boost in bottom-line results, and Employee Engagement and the Bottom Line, which looked at the financial performance at Best Buy and J.C. Penney.
Fraser Longden is the head of talent and engagement at Kingfisher PLC, the parent company for B&Q, the UK’s equivalent of Home Depot or Lowe’s. In an interview in the Gallup Management Journal (“Do-It-Yourself Engagement,” January 12, 2010), Longden offers an interesting perspective on the flip side of increasing the bottom line: the cost of disengaged employees.
“The harsh reality is that in 2005, 29% of our workforce was actively disengaged,” he says, “and we were spending £120 million a year just on wages of these individuals. So, from a cost perspective, we were spending a whole lot of money on people who didn’t want to be there. In the last survey, that figure has dropped to £31 million, which is a massive turnaround.”
Longden calls it a tug of war, the…
26Jan2010 | Steve George | 0 comments | ContinuedBaldrige and Financial Performance
Leaders looking for reasons to consider integrating Baldrige should be aware that the Baldrige model focuses on results. Whatever your organization’s goals, evaluating and improving your management system through regular Baldrige assessments will help you achieve them.
You can test the validity of that statement by looking at the results of organizations that have received the Baldrige Award. In this article, let’s consider the key financial results of a sampling of Award recipients:
- Maintained steady per-bushel costs from FY2006 to FY2008 despite 50-80% increase in energy costs, 30% increase in chemical costs, and 10% increase in maintenance costs (Cargill Corn Milling)
- Per-pupil expenditures among the lowest in North Carolina while being ranked academically in the state’s top 10 school systems (Iredell-Statesville Schools)
- Average charge $2,000 lower than that of its main competitor (Poudre Valley Health System)
- Revenue per associate approximately $4 million, nearly four times the IndustryWeek 90th percentile benchmark (PRO-TEC)
- Revenue increase from $33 million in 1989 to $847 million in 2006 (Mercy Health System)
- Increased revenue by 56% from 2001 to 2006 (Sharp HealthCare)
- Overall revenue increased from $640 million in FY2001 to over $1 billion in FY2007 (ARDEC)
- Operating margin grew from 35% in 2003 to 50% in 2006, while operating expenses remained well below those of its…
Employee Satisfaction Pays — Big Time
I’ve seen this story several places and it shows a correlation few understand. In the early 1990s, Sears was losing as much as four billion dollars a year on $50+ billion in sales. It used the employee-customer-profit chain to assert that revenue creation starts with employee attitudes and satisfaction, which affects customer satisfaction, which affects revenue and profits. It made this assertion believing the correlation to be true, and then it set out to prove it.
Nearly three-fourths of its workforce was part-time and turnover among this group was high. To understand why, Sears began surveying employees about their attitudes and satisfaction and correlating the results with customer satisfaction results and financial data. They got their proof.
According to the data, a five-point improvement on their employee attitude scale produced a 1.3% improvement in customer satisfaction, which, in turn, boosted revenue by 0.5%. On sales of $50 billion, that’s an increase of $250 million a year!
And the benefits don’t stop there. More satisfied employees work for Sears longer, which reduces turnover and lowers the costs associated with finding, hiring, and training new employees. More satisfied employees also recommend the company to family and friends, which increases sales.
In other words, Sears discovered that…
13Aug2009 | Steve George | 0 comments | Continued
